Business touch could save taxpayer billi...

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Business touch could save taxpayer billions

'What many people seem to miss is that spending on consultants will translate into huge cost benefits'

TRANSFORMING the public sector to operate along business rather than civil service lines could shave between 25% and 30% a year off Budget spending, according to Pierre Tredoux, head of Deloitte & Touche Consulting's public sector division.

In rand terms, that amounts to a staggering R43-billion to R52-billion a year - more than sufficient to cover the entire education budget, interest bill or finance the building of a new city the size of Bloemfontein. The list of possibilities is endless. Why then, isn't the government doing anything about it?

Well, it is, but it won't show in the upcoming Budget. Several departments have brought in professional consultants to assist in transforming a weighty bureaucracy into streamlined, "customer-focused" service providers. While the previous administration was resistant to change, believing things couldn't be done any better, the new government is acutely aware of its organisational shortcomings, says Tredoux.

"The old public sector culture was 'if you just stick to the rules you won't get fired', so no one pushed for results and that is exactly what we got - no results. Now there is a sense of urgency over the need for change."

The consulting industry is fed up with reports that government spending on consulting services has become a gravy train for opportunists.

The government is reportedly spending R1-billion on consulting services this year, though this figure is questioned by many.

"But if the figure is correct, I think it is money well spent," says Colin Bloom, partner at Arthur Andersen Business Consulting. "The vast majority of the R1-billion should be treated as capital and depreciated. What many people seem to miss is that this spending will translate into huge cost benefits."

Virtually every finance minister from Barend du Plessis on promised to scale back the public sector. But it is the one sector of the economy which just keeps on growing. Figures recently released by the Central Statistical Service show that public sector employment grew by 47 000 to 1,5-million over the past year, although this includes previously unrecorded staff in the former homelands.

Many doubt the government's resolve to scale down the public sector which, given the level of unemployment, is beginning to assume the complexion of a state welfare system.

As it enters the final stages of Budget preparation for 1997, the government could do worse than take a look at the radical transformations taking place within the Department of Public Works and Defence Force - both clients of Deloitte & Touche Consulting. Public Works is to slash its workforce from 8 000 to 3 500 over a period of three years, resulting in annual salary savings of R55-million.

With less than half the staff, the department will be able to operate more efficiently by eliminating needless functions, filling positions with more skilled staff and organising itself along business rather than civil service lines. Amazingly, the "downsizing" proposal enjoys broad support in the department.

A similar transformation is afoot in the SA National Defence Force. The 110 000-strong force has to effect savings of R4-billion a year to fit into its new budget of R9,5-billion and still fulfil its defensive role. According to Tredoux, it is generally accepted that the threat of external attack is minimal, although the army is increasingly called on to supplement an under-resourced police service.

"Be that as it may, the army is still too large for its stated role," says Tredoux. "The worldwide trend is towards smaller, well-equipped professional armies. There is a need for new and upgraded equipment, but that does not mean savings could not be effected."

Many of the army support functions can be eliminated or scaled down. The SANDF and Deloitte & Touche earlier this year redesigned the force's structure, which will result in sustainable cost savings of 22%, without diluting the operational effectiveness of the army.

Bloom says his company steers clear of government consulting work because of the protracted tendering process. It is, however, advising state-owned abattoir group Abacor, slated for privatisation.

"It is a completely different organisation now. This involved a transformation from a civil service to a commercial thought process and it will take a couple of years for the changes to bed down, but it is now an attractive proposition for investors."

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